PROFILE OF BUSINESS

Mozambique

In 2007, EBL acquired a research and development company that had spent approximately four years developing an optimal, integrated farming approach to a jatropha-based biodiesel feedstock.

The first Jatropha farming project in the Bilene District of Gaza province in Mozambique has been initiated and will be scaled over the life of the project. Energem has been formally allocated by the Mozambique government the rights to 60,000 hectares of land in Gaza Province and is in discussions over the allocation over a further 60,000 hectares in further provinces in light of the progress the company has achieved to date.

Quicktime movie Energem Jatropha Project, Mozambique February 2008

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The project enjoys the full support at all government and provincial levels and currently employs in excess of 250 people, with this figure set to increase in line with the project’s development.

A planting programme was initiated in September 2007 and has established nursery and planting unit facilities.

Each development unit (of which there are two) comprises approximately 1000 hectares which has been planted to evaluate growing characteristics and yields and equipment capable of planting at a rate of 300 hectares per month but this development has been slowed awaiting yield results from the already planted area. It is intended that the commercial crop of jatropha seed harvested from the farming operations will be processed to produce a crude oil, which will be exported to the project’s target markets in the European Union. Biodiesel refined from oils produced through the companies now mature test plantations has been tested by the South African Bureau of Standards and confirmed to fall within the EU specifications for biodiesel.

Jatropha curcas has been specifically chosen as the project’s principal feedstock crop. Jatropha is a hardy, inedible plant, whose seed produces a relatively high yield of oil when pressed. The cost of producing crude biodiesel from Jatropha is low when compared to current palm oil and rapeseed feedstock. In addition, the land on which the project is farming does not compete with ordinary feed crop land and this combined with the inedible nature of Jatropha ensures that cultivation for biodiesel does not lead to the displacement of land from the production of food.

Kenya

Kisumu Ethanol
Manufacturing Plant

The Kisumu ethanol plant was initiated in the late 1970’s as a state-owned project that was subsequently mothballed in the 1980s. It was acquired by Spectre International Ltd (“Spectre”) in 2003, which immediately launched a rehabilitation programme that resulted in the commissioning of the plant in 2004. An associated yeast plant was completed in 2006.

Energem is the controlling shareholder in Spectre with a 55% share. A local partner, with manufacturing and distribution experience in the region, owns 40% and a development trust holds 5% for the benefit of the local community.

An independent valuation and engineering report completed in March 2004 evaluated the plant’s pre-commissioning value at US$24 million and its replacement value at approximately US$100 million.

The Kisumu plant has a daily production capacity of 60,000 litres, and it is estimated that production output of up to 120,000 litres per day could be achieved with relatively low levels of investment.

The plant can produce both potable alcohol and industrial ethanol, which are used in beverage, medical and industrial applications. Ethanol can also be used as a biofuel. Currently, the Kisumu Plant produces only potable alcohol but the company is keen to see the emergence of a local ethanol biofuels market, which it will then seek to serve. The plant is well positioned to supply ethanol as a fuel additive to Kenya, Uganda and other nearby countries and this strategy is in line with local governmental aspiration and is also complementary to Energem’s mid-stream oil activities.

Water is readily available from Lake Victoria and the plant is located in the centre of a sugar cane growing region where its most important raw material, molasses, has traditionally been available. However, continuing shortages of molasses, which have led to a substantial increase in ethanol prices, have also impacted the plant’s ability to operate at full capacity. In response to this situation, the company is researching a contract farming scheme for sweet sorghum, for use as a secondary feedstock alongside molasses.

Sweet sorghum has sugar-rich stalks, a wide adaptability in different types of soil conditions and a water requirement lower than sugar cane. It can be harvested up to four times per year and, through a simple crushing process, produces appropriate feedstock for ethanol and alcohol production. By contrast, producing molasses from sugar cane is a more complicated process. According to the International Crops Research Institute for Semi-Arid Tropics, ethanol can be produced more efficiently and cheaply from sweet sorghum than from molasses. Production using sweet sorghum is also less polluting and produces cleaner burning ethanol with a higher octane rating than ethanol produced from molasses. In addition, the waste product can be used as animal feed and in power generation.